Wheat Climbs on Argentine Crop Damage, Outlook for Steady Demand

Oct. 18 (Bloomberg) -- Wheat rose in Chicago, set for a fifth weekly gain, after Argentina said cold and drought hurt its crop and on speculation U.S. and European exports will be sustained. The grain reached a four-month high in Paris trading.

Argentina, the second-largest Southern Hemisphere wheat shipper after Australia, is predicting a 2013-14 wheat crop of 8.8 million metric tons after cold weather and a lack of rain damaged 100,000 hectares (247,105 acres). That compares with an International Grains Council forecast for 11 million tons.

"A pickup in demand and production worries around the world drive buyers," Paul Georgy, Allendale Inc.’s president, wrote in a comment. "Traders are waiting for any indication Argentine wheat exports could be halted. This would place additional strain on tight U.S. hard red wheat carryover."

Wheat for delivery in December added 1.5 percent to $6.965 a bushel on the Chicago Board of Trade when trading was paused at 7:45 a.m. Milling wheat for delivery in November traded on NYSE Liffe in the French capital touched 202.75 euros ($277.80) a ton, the highest since June 10, before trading up 1.1 percent at 201.75 euros.

Argentina’s wheat exports may fall to 2 million tons in 2013-14 from 3.1 million tons in the previous season and 11.4 million tons in 2011-12, the country’s Agriculture Ministry wrote in a report yesterday.

"The big news overnight" is the Argentine outlook, Dave Norris, an independent U.K. feed trader, wrote in an online comment. "They may be pretty close to the truth with this one. There’s been talk of production below 10 million tons lately."

71% Surge

European Union soft-wheat export licenses in the current 2013-14 season jumped 71 percent from a year earlier to 8.02 million metric tons as of Oct. 15, the bloc reported yesterday. U.S. sales since June 1 were up 38 percent in annual terms as of Sept. 19, according to data published before the Oct. 1-16 partial government shutdown.

"Wheat will likely continue to be well supported for at least another four to six weeks as the U.S. and EU export pace remains elevated," Ole Houe, director advisory services at Ikon Commodities Pty Ltd. in Sydney, said in an e-mail today.

Wheat slid 10 percent in Chicago and 19 percent in Paris this year on an outlook for a record harvest, with world production forecast by the U.S. Department of Agriculture last month to jump 8.2 percent to 708.9 million tons. The USDA was closed during the shutdown, leaving investors without reports on export sales of crops.

Queensland Reaping

Australian farmers have started harvesting a 24.5 million- ton crop, 11 percent more than last year, the government estimates. Reaping in central Queensland is about 50 percent complete and may start early this year in central New South Wales, GrainCorp Ltd. said Oct. 14.

As Australia’s "harvest ramps up and the export pace from here picks up, we may well see pressure come back on global prices," said Houe at Ikon.

Soybeans for delivery in November rose 0.4 percent to $12.985 a bushel in Chicago, set for a first weekly gain in three. Corn for delivery in December advanced 0.6 percent to $4.455 a bushel, also poised to climb for the week.

--Editors: Dan Weeks, Nicholas Larkin.

To contact the reporters on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net; Phoebe Sedgman in Wellington at psedgman2@bloomberg.net

To contact the editor responsible for this story: Jake Lloyd-Smith at jlloydsmith@bloomberg.net